GRI Gamble: Carriers Play Hardball with Asia-Europe Spot Rate Hikes

By Gavin van Marle (The Loadstar) –

Container shipping lines on the main east-west trades this week managed to reverse 15 weeks of consecutive declines in spot freight rates by managing to push through a general rate increase on ex-Asia loadings.

This week’s Drewry World Container Index (WCI) saw the spot rate on the Shanghai-Rotterdam leg rise 8% week on week, to $3,396 per 40ft, while the Shanghai-Genoa leg grew 11%, to $3,648 per 40ft.

One European forwarder told The Loadstar the hike was largely due to a 1 November general rate increase that was applied last week for bookings on shipments due to be loaded in Asia from today – for example, MSC notified customers in October that its new FAK rate from 1 November was $5,000 per 40ft from Asia to North Europe.

“The GRIs we saw applied last week are already being reduced, and we do not expect these rates to maintain beyond November. It seems more an attempt to slow the decline in rates after Golden week,” he said.

“Feedback from customers who move cargo on these lanes is that they have enough stock now and demand will be low for the next three months – so we can’t see any reason why rate levels will maintain elevated levels, longer-term.

“Bookings have been a little tight, but this was due to the blank sailings not extra demand from customers,” he explained.

An analysis of the eeSea liner database shows that, of 168 liner services scheduled to operate Asia-North Europe and Asia-Mediterranean services in October, only 147 actually set sail, the remaining 21 sailings being blanked.

This had the effect of reducing capacity on the trades by around 300,000 teu, the scheduled 1.88m teu reduced to 1.57m teu.

A further attempt at hiking Asia-Europe rate levels is scheduled for 15 November, although the quantum varies considerably among carriers: MSC has notified a new FAK rate of 5,500 per 40ft for Asia-North Europe shipments; Hapag-Lloyd has announced $3,500 per 40ft for North Europe and $3,700 to west Mediterranean; CMA CGM is aiming for $5,700 per 40ft on Asia-West Mediterranean shipments; while Maersk has introduced a peak season surcharge of $500 on all Asia-Europe shipments.

However, Xeneta chief analyst Peter Sand described the spot rate hikes as “desperate”, and said they were part of carriers’ negotiating strategy as shippers and lines begin to discuss 2025 contracts, which typically run January-December on Asia-Europe.

“Tender season for new long-term contracts is already under way for many European shippers, so it is no coincidence these are the trades where carriers are fighting so hard to keep the spot market elevated in the hope it strengthens their hand at the negotiating table.

“European shippers may be spooked by the uptick in average spot rates on these trades at the beginning of November, but it is clear the fundamental direction of the market is downward.

“That is why it is vitally important that European shippers pay close attention to market developments during November, because these desperate efforts by carriers to push up spot rates are unlikely to succeed for too long, and it could have a significant bearing on the long-term rates they secure for new contracts coming into force in January,” he said.

Elsewhere, spot rates on the transpacific and transatlantic trades were unchanged, week on week.

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